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When Ken Paxton, attorney general for the state of Texas, and nine other states filed a competition lawsuit against Google in December 2020, he published an explanatory video.

The Internet advertising market, which Paxton and his colleagues want to regulate with their lawsuit, is so complex that Paxton wanted to make his commitment as easy as possible to his voters.

"Google uses its market power to control Internet advertising prices, form a cartel and manipulate auctions," said Paxton. Google kept from the public that the underlying auctions for the advertising space on the net had been manipulated - and that because of this money had flowed into Google's pockets, which should actually have flowed to the publishers.

But how exactly Google should have manipulated the auctions, Paxton did not reveal in December.

Google did that itself - involuntarily.

The group inadvertently submitted documents to the court that were completely unredacted - and that made Google's “Project Bernanke” public for the first time.

Google withdrew the documents a few hours later, but by then court reporters from the Jura news portal Mlex had already discovered the mistake and made it public.

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In order to understand the importance of the project, named after the ex-central bank chief of the United States, one must first understand how online advertising works on the websites of a news portal, blog or e-mail provider: Many online advertisements are displayed in a personalized manner - One user sees advertisements for a hardware store, the next for a car or wine. Which ad the user sees is decided in the few milliseconds that pass between the click on the link to the page and the first appearance of the page in the browser.

A small automatic miniature auction takes place every time.

Advertisers have previously determined how much money they want to spend on a user who might be interested in cars seeing their advertisement.

The highest bidder should win and may place his ad, but the auction only runs for a few milliseconds - that is crucial for "Project Bernanke".

These miniature auctions are not organized by individual site operators, but by large advertising networks such as Google's display network Google Ads.

Thanks to technologies such as tracking cookies, users can group them according to their interests and know which advertisements might suit them.

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They bundle advertising space from site operators and receive a share of the income for this.

At the same time, however, Google itself takes on the marketing of Internet advertising, and in the mini-auctions for user interest it is also bidding on the areas that are marketed by its own network.

This is exactly where Google comes in with its “Project Bernanke”.

The group uses information from historical auction data: Due to the time limit of milliseconds, only a pre-bid is possible.

Since the Google system, thanks to its role as advertising space marketer, knows exclusively how high the winning bids were for certain advertising space and advertising topics in previous auctions, it automatically adjusts the bid amount for its own advertising customers so that they win the auction, their bids but only marginally above the second highest bid.

If successful, Google will share in the turnover.

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So Google is exploiting its dual role - to the detriment of the website operator.

In 2013, the court documents reveal, Google earned an additional $ 230 million from "Bernanke".

"Google is here at the same time ball thrower, catcher and referee," said Attorney General Paxton the position of the group with a baseball comparison.

The fact that Google managers use a central bank allusion to name their money machine shows how well they are aware of their position. In a first statement to the US media, Google has already admitted that the "Bernanke project" exists. The company claims, however, that the "Bernanke" data does not go beyond what other advertising buying tools of the competition offer in terms of information.

“Bernanke” is not the only measure with which Google exploits its market power to the detriment of other competitors in the advertising market.

"Jedi Blue" is another of these special projects: According to the Texas prosecution, it involves a technique called "Header Bidding".

The technology is about who can be the first to bid on the advertising space on the Internet.

Facebook had used the technology so that publishers and website operators from several advertising networks could collect auction bids for their advertising space at the same time.

Google under pressure worldwide

But that did not suit Google - so, according to the allegation of the Texans, leading Google managers had agreed with their Facebook counterparts and thus ensured that Facebook no longer offered the technology.

In return, Google gave Facebook preferential terms.

Also, Google can hardly deny that the agreement exists - according to the Washington Post, the signatories include various Google top managers and Facebook's deputy boss Sheryl Sandberg.

For Google, the investigation from Texas comes at a highly unfortunate point in time: The company is under pressure both at home and around the world due to anti-competitive behavior.

Not only the states, but also the US Department of Justice is currently taking action against Google, filed a lawsuit against the group in October 2020.

The accusation: Google has secured its dominance in mobile search through anti-competitive agreements with device manufacturers.

In addition, Google took advantage of the market position of its Chrome browser.

Google's special projects could also play a role in the outcome of this lawsuit; the Justice Department's competition experts have already requested access to files in Texas.

Last but not least, Google is currently trying to implement a new advertising technique on the Internet that, as a replacement for the cookies previously used, should help to sort users according to interest groups and display appropriate advertising.

The technology, named “FLoC” by Google, is intended to sort users into cohorts in compliance with data protection regulations, so that a few thousand users should be shown the same advertising.

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The technology only works if browser manufacturers and website operators play along.

So far it is only available in the Chrome browser.

But in view of Google's previous competitive behavior, the other market participants fear the Group's dominance in such an important technology - and are now rejecting “FLoC” on a broad front.

Mozilla rejects "FLoC"

The Mozilla Foundation, the makers of the competing Firefox browser, have not yet planned to implement “FLoC”.

Microsoft has not yet built the technology into its Edge browser either.

An Apple developer commented tellingly on Twitter that they had not yet said that they wanted to implement "FLoC" in Safari.

And on the part of the website operator, WordPress and the search engine DuckDuckGo have rejected “FLoC” and classified it as harmful.

Google's dominant position in the advertising market could shake if “FLoC” fails.

Then the market would be open again to more competition.

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